Railway freight traffic to grow 5.2% this fiscal: Centre for Monitoring Indian Economy

MUMBAI: Railway freight traffic is likely to clock a 5.2% growth this fiscal on higher demand from coal and iron ore meant for domestic steel plants, a forecast by Centre for Monitoring Indian Economy (CMIE) says.

"In 2012-13, the revenue-earning freight traffic of the Indian Railways is projected to rise by 5.2%. About 1,020 million tonnes of commodities are likely to be transported during the year," CMIE said in its latest report. The freight traffic during the June quarter increased 4.8% compared to the same period year ago.

Noting that the growth will be supported by coal and iron ore meant for domestic steel plants, the report said country's coal imports are expected to rise 28.3% to 134.4 million, which will create a need for transporting. There is a strong demand for coal from the power and steel sectors. Since the domestic output is not sufficient to meet the demand of the power sector, coal is imported.

"Finished steel production is expected to rise to 7.4%, to cater to demand from the infrastructure and automobile sectors," it said. According to CMIE, in June 2012, the Railways freight traffic increased by 5.2% year-on-year to 80.4 million tonnes.

Higher freight volumes of coal and iron ore meant for steel plants neutralised the effect of sharp decline in traffic of iron ore (excluding for steel plants) and fertilisers.

Accordingly, the Railways freight revenue rose by a robust 29.2 % to 6,926 crore. This increase was mainly added by a sharp 39.7% increase in freight revenue of coal, the CMIE report said.

The think tank added that the freight volumes of coal rose by 10.1% in June (y-o-y) to 39.3 million tonnes driven by a 9-12% increase in traffic of thermal coal and coal for public use. The iron ore freight meant for domestic steel plants jumped by 40.7% to 5.2 million tonnes during the month.